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International Private Equity

Book Description

Bringing a unique joint practitioner and academic perspective to the topic, this is the only available text on private equity truly international in focus. Examples are drawn from Europe the Middle East, Africa and America with major case studies from a wide range of business sectors, from the prestigious collection of the London Business School's Coller Institute of Private Equity. Much more than a simple case book, however, International Private Equity provides a valuable overview of the private equity industry and uses the studies to exemplify all stages of the deal process, and to illustrate such key topics as investing in emerging markets; each chapter guides the reader with an authoritative narrative on the topic treated. Covering all the main aspects of the private equity model, the book includes treatment of fund raising, fund structuring, fund performance measurement, private equity valuation, due diligence, modeling of leveraged buyout transactions, and harvesting of private equity investments.

Table of Contents

  1. Cover
  2. HalfTitle page
  3. Title page
  4. Copyright page
  5. Preface
  6. Abbreviations
  7. About the authors
  8. Dedication
  9. Part 1: Overview and fund-level analysis
    1. Chapter 1: Introduction and Overview
      1. 1.1 Introduction
      2. 1.2 Cyclicality of the Private Equity Industry
      3. 1.3 Statistics on the Private Equity Industry
      4. 1.4 Recent Regulatory Activity
      5. 1.5 The Outlook of the Private Equity Industry
      6. 1.6 REFERENCES
    2. Chapter 2: Private Equity Fund Economics
      1. 2.1 OVERVIEW
      2. 2.2 Private Equity Firms or General Partners
      3. 2.3 Investors in Private Equity Funds or Limited Partners
      4. 2.4 Private Equity Funds or Limited Partnerships
      5. 2.5 Advisors and Agents
      6. 2.6 References
    3. Chapter 3: Performance Measurement in Private Equity
      1. 3.1 OVERVIEW
      2. 3.2 Measures of Private Equity Fund Performance
      3. 3.3 Benchmarking Private Equity Performance
      4. 3.4 Academic Findings on the Performance of Private Equity Funds
      5. 3.5 Why the Performance Assessment of Private Equity Remains Difficult
      6. 3.6 Conclusions
      7. 3.7 References
    4. Chapter 4: Private Equity Investing in Emerging Markets
      1. 4.1 Introduction
      2. 4.2 Investment Landscape
      3. 4.3 Drivers for Pe Investments in Emerging Economies
      4. 4.4 Risks of Investing in Emerging Economies
      5. 4.5 Market Structure and Investment Characteristics
      6. 4.6 Comparative Landscape of Emerging Markets
      7. 4.7 Summary
      8. 4.8 References
    5. Chapter 5: Fund Due Diligence
      1. 5.1 What is Fund Due Diligence?
      2. 5.2 Lp Investment Process
      3. 5.3 Fund Due Diligence in Detail
      4. 5.4 Summary
    6. Chapter 6: Private Equity Fund Accounting
      1. 6.1 What is Happening in Private Equity Accounting?
      2. 6.2 Current Major Issues and Complexities
      3. 6.3 Interpreting Fund Accounts
    7. Chapter 7: Gatekeepers
      1. 7.1 Introduction
      2. 7.2 Main Types of Professional Advisors
      3. 7.3 In-House or Outsourcing?
      4. 7.4 Outsourcing to a Fund of Funds
      5. 7.5 Fund-of-Funds Economics
      6. 7.6 Selecting A Fund of Funds
      7. 7.7 Outlook
      8. 7.8 Bibliography
    8. Chapter 8: Listed Private Equity
      1. 8.1 Introduction
      2. 8.2 Benefits and Disadvantages of Listed Private Equity
      3. 8.3 Economic and Organizational Forms
      4. 8.4 Legal Forms
      5. 8.5 Estimated Risk Profile of Listed Private Equity
      6. 8.6 Lpe Indexes
      7. 8.7 References
    9. Chapter 9: Secondary Fund Transactions
      1. 9.1 Introduction
      2. 9.2 Secondary Market Development
      3. 9.3 Parties Involved in Secondary Transactions
      4. 9.4 Secondary Transactions
      5. 9.5 The Pricing of Secondary Transactions
      6. 9.6 Conclusion
      7. 9.7 References
  10. Part 2: Deal-level analysis
    1. Chapter 10: Valuation of Private Equity Companies
      1. 10.1 Introduction
      2. 10.2 Valuation Guidelines
      3. 10.3 Implementation of the Main Valuation Methods: Multiples and DCF
      4. 10.4 Pitfalls to be Wary of When Valuing Private Companies
      5. 10.A Pueblo Clothing SPA
      6. 10.A.1 Analysis: What Are the Big Judgments Made in the Valuation?
      7. 10.B Chariot Skates PLC
      8. 10.B.1 Analysis: What are the Big Judgments Made in the Valuation?
      9. 10.C References
    2. Chapter 11: Deal Analysis and Due Diligence
      1. 11.1 Introduction
      2. 11.2 The Sale Process
      3. 11.3 Circumstances Influence the Due Diligence Process
      4. 11.4 Deal Analysis and Due Diligence During the Sale Process
      5. 11.5 Motives/Perspectives of Stakeholders
    3. Chapter 12: Leveraged Buyout Transactions
      1. 12.1 Introduction
      2. 12.2 LBO Execution: The Deal Process
      3. 12.3 LBO Stakeholders
      4. 12.4 Value Creation in an LBO
      5. 12.5 References
    4. Chapter 13: Leveraged Buyout Modeling: An Excel Application
      1. 13.1 Overview
      2. 13.2 Build A Pre–transaction Structure Model
      3. 13.3 Determine Transaction Structure: Uses of Funds
      4. 13.4 Determine Transaction Structure: Sources of Funds
      5. 13.5 Build A Post–transaction Structure Model
      6. 13.6 Determine Exit and Compute Returns
      7. 13.7 Optimization and Analysis of the LBO Model
      8. 13.8 Analysis of the Toys R us LBO
      9. 13.9 Reference
    5. Chapter 14: Post-Deal Operational Improvements
      1. 14.1 What Operational Improvements are Made Post Deal?
      2. 14.2 Identifying the Opportunity
      3. 14.3 Ebitda Growth
      4. 14.4 Maximizing Assets—human Capital
      5. 14.5 When Things Go Wrong
      6. 14.6 Conclusion
      7. 14.7 References
    6. Chapter 15: Harvesting Private Equity Investments
      1. 15.1 Introduction
      2. 15.2 Steps to Exiting A Private Equity Investment
      3. 15.3 Exit Strategies
      4. 15.4 Summary
      5. 15.5 References
  11. Part 3: Early-stage investing
    1. Chapter 16: Angel Investing
      1. 16.1 What is Angel Investing?
      2. 16.2 What Motivates Business Angels?
      3. 16.3 Angel Investment Process
      4. 16.4 Recent Developments and Trends
      5. 16.5 Summary
      6. 16.6 References
    2. Chapter 17: Venture Capital
      1. 17.1 Introduction
      2. 17.2 What is Venture Capital
      3. 17.3 The VC Investment Process
      4. 17.4 The VC Contract
      5. 17.5 Alternative Sources of VC Financing
      6. 17.6 Conclusion
      7. 17.7 References
  12. Part 4: Case studies
    1. Chapter 18: Realza Capital
      1. December 2006
      2. December 2008
    2. Chapter 19: Private equity fund economics
      1. Swicorp—a Short History
      2. The Mena Region
      3. The Mena Private Equity Landscape
      4. The Role of Sovereign Wealth Funds (SWFS)
      5. Swicorp’s Intaj Investment Strategy
      6. Deal Selection Process
      7. Step Carpet Group
      8. Jordan Aviation LLC
    3. Chapter 20: Mekong Capital: The importance of corporate culture in emerging market private equity
      1. Founding Mekong Capital
      2. Vietnam and the Private Equity Industry
      3. MEF I and the Initial Investment Philosophy
      4. MEF I Case Study: Aa Corporation
      5. MEF II and A New Investment Philosophy
      6. MEF II Case Study: International Consumer Products
      7. Vietnam Azalea Fund
      8. 2007—Searching for Answers from Within
      9. The Corporate Transformation Process
      10. Will it Work?
    4. Chapter 21: Bloomsbury Capital: June 2007
      1. Bloomsbury Capital
    5. Chapter 22: Edcon: Going shopping in South Africa
      1. EDCON: A Leading South African Retailer
      2. Bain Capital: Background
      3. Opportunity Knocks
      4. South Africa
      5. Currency Risk
      6. The Deal
      7. The Bid
    6. Chapter 23: FiberNet Communications
      1. Hungarian History and Economy
      2. Hungarian Television Broadcasting Market
      3. Cable TV Industry
      4. Fibernet’s Key Competitors
      5. Upc Hungary
      6. MatákáBeltv
      7. The Fibernet Opportunity
    7. Chapter 24: Seat SpA
      1. Chronology of Seat Transaction
      2. Bain Capital: Background
      3. The Global and European Directory Market
      4. The Italian Directory Market
      5. Seat Business Description
      6. Market Entry of Pagine Utili
      7. The Internet: Threat or Opportunity?
      8. Due Diligence
      9. Italian Economic and Political Landscape
      10. Privatization Process in Italy
      11. THE DEAL
    8. Chapter 25: Ducati and Investindustrial: Racing out of the pits and over the finish line
      1. Investindustrial Acquisition of Ducati
      2. Improving the Company (2006–2008)
      3. The World Motorcycle Industry in 2008
      4. Raising A New Fund
      5. A “Wild Ride” for Ducati’s Stock
      6. June 2010
    9. Chapter 26: Styles & Wood: Behind the scenes of retail
      1. Styles & Wood: The History
      2. Gerard Quiligotti and the Turnaround Years
      3. The MBO: The Fall of Wembley Stadium Group
      4. Styles & Wood Since 1996: Managing the Growth Strategy
      5. Project OAK in 2001: Management Incentives and Reapingrewards
      6. Project OVAL in 2004: From 3I To Aberdeen—Secondary Buyout Decision
      7. Market and Competition
      8. Investing Decision
    10. Chapter 27: SunRay Renewable Energy: Private equity in the sunshine
      1. Sunray’s Choice of Solar Technology
      2. The Value Chain of A Solar PV Developer
      3. The European Renewable Market in 2006–2008
      4. Sunray’s Business Model
      5. Building the Management Team
      6. Learning the Solar PV Game the Hard Way
      7. Scaling Up the Business Across Southern Europe
      8. Under the Umbrella of Private Equity
      9. Montalto Di Castro: Building the Largest Solar Power Park in Europe
      10. The Decision to Exit
      11. Sunray’s Spirit Still Alive
    11. Chapter 28: Debenhams
      1. Private Equity Goes Shopping
      2. Post Deal and Going Public Again
    12. Chapter 29: Optos: A sight worth seeing
      1. Douglas Anderson and the Vision
      2. Scottish Business Landscape and Funding for Early-Stage Startups
      3. Product Development
      4. Diseases of the Back of the Eye and Optos’ Target Market
      5. Manufacturing
      6. Competition
      7. Business Model: The “Razor/Razor Blade” Concept
      8. Profit and Loss Implications
      9. Cash Flow Implications
      10. Financing 1995–2001
      11. Geographic Expansion
      12. Financing in 2002
    13. Chapter 30: Capital for Enterprise U.K.: Bridging the SME early-stage finance gap
      1. An “Equity Gap”?
      2. Previous Attempts by the U.K. Government to Tackle the “Equity Gap”
      3. Limits of Previous Programs
      4. Launching Enterprise Capital Funds
      5. Key questions and Options for the ECF Program Design
      6. The First Years of Operation of the ECF Program
      7. A Few Years on: A First Assessment
      8. Where Next?
  13. Glossary
  14. Index